DGL’s FY25: Revenue Up 3%, EBITDA Down 19%, $24.6m Statutory Loss

A Year of Transition and Challenge

DGL Group Limited, a key player in chemical logistics and services across Australia and New Zealand, has reported a mixed set of financial results for the fiscal year ended June 30, 2025. While sales revenue edged up by 3.3% to $481.5 million, underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) fell sharply by 19% to $52.1 million. This divergence highlights the operational pressures the company faced during what CEO Simon Henry described as a "transitional year."

The company’s statutory net loss after tax stood at $24.6 million, a stark reversal from the prior year’s profit, largely due to one-off costs including goodwill impairments, asset write-downs, and restructuring expenses. These non-recurring charges underscore the financial strain from integrating multiple acquisitions and addressing underperforming segments.

Environmental Division Under Pressure

A significant drag on profitability came from DGL’s Environmental division, which suffered losses amid intensified competition for used lead acid batteries (ULAB). This segment’s challenges prompted the company to cease lead battery recycling at its Laverton, Victoria facility, consolidating operations at its Unanderra, NSW site. The restructuring also involved rationalising overheads and workforce costs to better align with market realities and improve margins.

Despite these setbacks, DGL’s Manufacturing and Logistics divisions delivered solid performances, contributing to improved gross margins and supporting a strong operating cash flow conversion rate of 110%. Free cash flow from operations rose 20% to $44.7 million, reflecting disciplined cash management amid the restructuring.

Integration and Efficiency Drive for FY26

Over the past five years, DGL has completed 30 business and asset acquisitions, significantly expanding its footprint and capabilities. However, the company acknowledges the need for deeper operational integration to unlock cost savings and productivity gains. To this end, FY26 will see the rollout of new enterprise resource planning (ERP), finance, logistics, and human resources systems designed to replace over 30 disparate platforms.

These technology upgrades, combined with ongoing optimisation of the property portfolio, moving away from outdated facilities to larger, more efficient sites, are expected to enhance operational efficiency and customer service. Additionally, DGL has reduced its net debt to $94.6 million, maintaining a manageable leverage ratio of 1.82 times net debt to underlying EBITDA.

Looking Ahead Amid Uncertainty

While macroeconomic uncertainties persist, DGL remains confident in its diversified business model and critical role in essential industries. The company anticipates improved financial results in FY26 driven by integration benefits, cost reductions, and increased contributions from recent capital investments. The transition from a collection of specialised businesses to a cohesive industrial group is poised to create value for shareholders and stakeholders alike.